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If your company fails, your equity is worth $0 no matter how much you have. If your company is the next Google, then you're all going to be so rich it won't mat
by cperciva 11y ago
If your company fails, your equity is worth $0 no matter how much you have. If your company is the next Google, then you're all going to be so rich it won't matter.
You sound like a VC. While some investors might not care about any exit smaller than Google, let me assure you that there are plenty of companies which are worth more than $0 but less than $23B; if a company is acquired for $5M, there's a big difference between owning 5% and owning 50%.
- exelius 11y agoIf a VC-funded company is acquired for $5M, the founders likely aren't getting anything - liquidation preferences from angel/seed and A round would likely wipe them out almost entirely. Equity in an early company is 100% based on potential. Why should the guy who filed the paperwork and found an investor claim all the equity for a company he has not yet built? What about the efforts of the other employees (who will probably end up doing just as much for the company)? Unless you're paying them an above-market salary, don't they have some right to the company they helped build?
- cperciva 11y agoWhen did I say anything about being VC-funded? There are plenty of us who bootstrap companies into that range. As patio11 commented recently: "There appears to be a liquid market for businesses which are profitable. That is a Tokyo word. Means 'makes money'"